Trade War Basics 101

There is a lot of news coverage on the trade war, with various implications but many are still puzzled as to why this trade war began. We take a...

There is a lot of news coverage on the trade war, with various implications but many are still puzzled as to why this trade war began. We take a look inside of the reasoning behind Trump’s decision to impose tariffs on imported Chinese goods, with the implications that followed.

U.S. President Donald Trump has cited several reasons as to why he started imposing tariffs, through his favorite social media platform Twitter. Trump argues that China is flooding the U.S. with cheap steel and aluminium, causing domestic steel and aluminium production to decline. Not to mention this practice also ‘jeopardizes national security’ according to Trump.

Another motive behind starting this trade war is to punish China for reportedly stealing intellectual property and close trade deficits. Trump’s goal of imposing tariffs on Chinese imports will raise the price of these goods, enabling domestic businesses to compete.

There are some negative side effects of imposing a tariffs, which can result in the competing country imposing tariffs as retaliation and this is exactly what China did on some of the biggest U.S. imports.

In the case of the steel industry this tariff will make it more expensive for foreign steel suppliers to to business in the U.S. and results with U.S. citizen having to pay the price. Since making the steel more expensive, all the products made with this material increase in price at the U.S. consumers’ expense.

Steel prices also influence other industries that rely on the material for their operations, such as oil rigs, that uses steel for their infrastructures. Another result of imposing tariffs is that other countries start to impose tariffs as well that can be damaging to President Trump’s voting base, with tariffs hitting the industries that comprise of Trump’s voting base.

All of this means that this could negatively influence Trump’s polling numbers for the upcoming 2020 Presidential election. For more on the trade war, check out the videos above.